Welcome back. The global economy is the most complex machine ever built by humans. It is a chaotic, adaptive system of billions of actors, trillions of decisions, and countless physical flows of goods. And as the COVID pandemic brutally revealed, it is also incredibly fragile. Today, we explore how World Models are being used to build a 'digital twin' of this global machine, not to control it, but to understand its vulnerabilities and prevent systemic collapse.The vision is a World Model that integrates three layers: the physical layer of supply chains—the ships, planes, trucks, and warehouses; the financial layer of capital flows, investments, and currency markets; and the informational layer of news, consumer sentiment, and geopolitical events. Most models today look at only one of these layers. A World Model would simulate their interaction.Let's take a concrete example. Imagine a tsunami hits a major port in Southeast Asia. A traditional model might show the immediate impact on shipping costs. A World Model would simulate the ripple effects. It would predict the factory shutdowns in Europe due to missing components, the speculative price spikes in commodity markets, the secondary impacts on transportation and insurance companies, and even the potential for social unrest in regions that depend on imported goods. It would run thousands of these scenarios in parallel, each with slight variations, to generate a probability distribution of outcomes.This is what companies like Flexport and Maersk, along with financial institutions, are slowly building towards. They are creating 'control towers' that are the embryonic precursors to a full World Model.The potential for preventing black swan events is immense. The 2008 financial crisis was a failure of models that didn't understand the interconnectedness of 'safe' assets. The COVID supply shock was a failure to model the fragility of just-in-time logistics. A global economic World Model would be stress-tested constantly. Regulators could simulate the impact of a new banking regulation. A corporation could simulate the resilience of its supply chain against a dozen different disaster scenarios before committing to a strategy.This moves us from reactive crisis management to proactive crisis prevention. We would no longer be surprised by a collapse; we would see it coming in the simulation and have a portfolio of pre-tested responses ready to deploy.But this power comes with profound risks. The most obvious is the potential for self-fulfilling prophecies. If the World Model predicts a bank run, and that prediction is leaked, it could cause the very bank run it foresaw. Furthermore, whoever owns the most accurate model holds a colossal advantage. They could engage in what we might call 'simulation arbitrage'—making financial moves or geopolitical plays based on knowledge of future disruptions that only their model can see. This wouldn't just be insider trading; it would be future-insider trading.My controversial take is that the creation of a truly accurate global economic World Model would mark the end of 'free market' capitalism as we know it. It would be the ultimate central planning tool. The 'invisible hand' of the market, described by Adam Smith, would be replaced by the visible mind of a simulation. The question would then become: who controls the mind? Is it a democratic institution, a private corporation, or an autocratic state? The economic model of the 21st century may be determined by who builds the best simulation of it first.This technology doesn't just predict the economy; it has the potential to redefine its very nature.Yet, for all their power, we must remember that these are still models. They are approximations. And as we push them to their limits, we will inevitably find where they break. Our next episode is a sobering look at the fundamental boundaries of simulation itself.This has been The World Model Podcast. We map the flows of power and capital.